A nature-positive economy: biodiversity, ecosystem services and water

Biodiversity and ecosystem services

Biodiversity – covering species, ecosystems and genetic diversity - underpins all life and provides vital benefits to our societies and economies. Yet, pressures from land- and sea-use change, overexploitation of natural resources, pollution and climate change are contributing to an alarming loss of biological diversity. In line with the Convention on Biological Diversity (CBD), the 2030 Agenda for Sustainable Development places strong emphasis on biodiversity for achieving global goals for people and planet.

OECD analysis focuses on the economic aspects of biodiversity and aims at enhancing understanding of how biodiversity and associated ecosystems can be valued, and how these values can be captured through policy instruments and incentives to support biodiversity conservation and sustainable use. The objective is to promote policies that are environmentally effective, economically efficient and distributionally equitable.

Given on-going and projected trends in biodiversity loss and degradation, there is an urgent need for: greater and more ambitious use of policies including economic instruments, more cost-effective use of existing finance for biodiversity, and mainstreaming of biodiversity across sectors of the economy.

OECD work on biodiversity also supports the UN Convention on Biological Diversity, and has provided analysis relevant to the post2020 Global Biodiversity Framework and CBD COP15 in December 2022. Work on The Post-2020 biodiversity framework: targets, indicators and measurability implications at global and national level, put forward the concept of headline indicators, as a means to ensure more consistent and comparable monitoring of progress towards individual targets across countries.

The OECD released Biodiversity: Finance and the Economic and Business Case for Action, which was launched at the G7 Environment Ministers’ Meeting in Metz, France in May 2019. A follow on report on A Comprehensive Overview of Global Biodiversity Finance, covering public, private, domestic and international finance flows to protect biodiversity, was released in 2020.

More recently, the OECD released in 2021 a report on Biodiversity, Natural Capital and the Economy: A Policy Guide for Finance, Economic and Environment Ministers, which was prepared at the request of the UK G7 Presidency. The report provides the latest findings and policy guidance for G7 and other countries to underpin transformative domestic action to address biodiversity loss in four key areas: measuring and mainstreaming biodiversity; aligning budgetary and fiscal policy with biodiversity; embedding biodiversity in the financial sector; and improving biodiversity outcomes linked to international trade.

OECD work also focuses on tracking economic instruments and the finance they mobilise for biodiversity. These policy instruments include biodiversity-relevant taxes, fees and charges, positive subsidies and tradable permits. This work serves to monitor progress towards the implementation of the OECD Council Recommendation on the Use of Economic Instruments to Promote Biodiversity Conservation and Sustainable Use. The data was used to monitor progress towards Aichi Target 3 on incentives and Target 20 on resource mobilisation under the previous 2011-2020 Strategic Plan for Biodiversity under the CBD, and will be relevant to the Post-2020 Global Biodiversity Framework. Latest trends are provided in Tracking Economic Instruments and Finance for Biodiversity – 2021, which also covers new data on payments for ecosystem services and biodiversity offsets.

Work has also focused on incentives harmful to biodiversity. A new report, Identifying and assessing incentives, including subsidies, harmful to biodiversity at national level: A comparative review of existing national level assessments and insights for good practice, was released in 2022.

Sub-national governments have a key role in addressing biodiversity loss. Drawing on policy practices from Scotland (UK), France and other signatories to the Edinburgh Declaration, Enhancing the effectiveness of sub-national biodiversity policy - Practices in France and Scotland, United Kingdom examines governance and institutional issues as well as the policy instruments that subnational governments can leverage to deliver positive biodiversity outcomes.

Biodiversity loss and climate change are closely linked. Climate change is one of the five key pressures on biodiversity loss while degradation and loss of ecosystems can result in significant greenhouse gas emissions. At the same time, biodiversity and ecosystem services play an important role in helping people adapt to the impacts of climate change, and reducing the risk of climate-related disasters. Towards Sustainable Land Use: Aligning Biodiversity, Climate and Food Policies examines on-going challenges for aligning land-use policy with climate, biodiversity and food objectives, and the opportunities to enhance the sustainability of land-use systems. Adapting to a Changing Climate in the Management of Coastal Zones highlights how coastal ecosystems, such as mangroves, provide significant benefits, including decreasing the impact of coastal flooding.

Scaling up Nature-based Solutions to Tackle Water-related

Climate Risks: Insights from Mexico and the United Kingdom examines good practices for scaling up nature-based solution for adaptation to climate change.

On-going work on biodiversity is focusing on mainstreaming biodiversity in renewable energy infrastructure, and biodiversity in green budget tagging.

Number of countries with biodiversity-relevant economic instruments

Source: OECD PINE database, accessed 28 July 2021 https://www.oecd.org/environment/indicators-modelling-outlooks/policy-instrument-database/

Key Publications and websites

• Identifying and assessing subsidies and other incentives harmful to biodiversity: OECD Environment Working Papers, OECD Environment Policy Papers (2022)

• Biodiversity, Natural Capital and the Economy: A Policy Guide for Finance, Economic and Environment Ministers, OECD Environment Policy Papers (2021)

• Tracking Economic Instruments and Finance for Biodiversity, (2021)

• Adapting to a changing climate in the management of coastal zones, OECD Environment Policy Papers (2021)

• Enhancing the effectiveness of sub-national biodiversity policy, OECD Regional Development Papers (2021)

• A Comprehensive Overview of Global Biodiversity Finance (2020)

• Towards Sustainable Land Use: Aligning Biodiversity, Climate and Food Policies (2020)

• The Post-2020 Biodiversity Framework: Targets, indicators and measurability implications at global and national level (2019)

• http://oe.cd/biodiversity

• http://oe.cd/BLUE

Contact for more information

Katia Karousakis

Environment Directorate

E-mail: Katia.Karousakis@oecd.org